What`s the deal with all in one mortgate accounts?
- Thread starter InvestBC
- Start date
- Joined
- Sep 3, 2007
- Messages
- 39
I currently use Manulife as they have a good HELOC (Home Equity Line of Credit). I first heard about them from friends who put their mortgage with them. The friends told me that the mortgage and the bank account are one so that when you get a pay cheque, for example, it gets deposited into the same account as where your mortgage payment comes out.
They said that having your cash in with the mortgage significantly reduces the amount you will pay on your total mortgage as the principal is often less than if it were just a mortgage account.
For me, I use it as a way to extract cash for investing in real estate so there is no change in my 1st mortgage pay down.
As a secured LOC, I`ve been able to get funding at prime rate.
The real upside for full-time investors (I`m assuming this hasn`t changed since I joined) is that they offer up to 65% LTV with no income qualification and they pay the appraisal fee.
The only catch that I`ve experienced is that they charge $14 monthly administration fee (no big deal), if they`re in 2nd position on the mortgage they require that when your 1st mortgage comes up for renewal that you transfer the 1st to them (or you pay 0.5% - I think - higher on the 2nd mortgage), and that it is a virtual bank. (The virtual bank part is a bit irritating some times but no big deal if you manage it - they work with RBC so you can deposit payments to them. If you need immediate funds via money order, it takes up to 2 days to get it although you can write a cheque for normal transactions and it`s good immediately.)
So, other than the minor irritations, I find it a very useful product.
Hope this helps! Ken
They said that having your cash in with the mortgage significantly reduces the amount you will pay on your total mortgage as the principal is often less than if it were just a mortgage account.
For me, I use it as a way to extract cash for investing in real estate so there is no change in my 1st mortgage pay down.
As a secured LOC, I`ve been able to get funding at prime rate.
The real upside for full-time investors (I`m assuming this hasn`t changed since I joined) is that they offer up to 65% LTV with no income qualification and they pay the appraisal fee.
The only catch that I`ve experienced is that they charge $14 monthly administration fee (no big deal), if they`re in 2nd position on the mortgage they require that when your 1st mortgage comes up for renewal that you transfer the 1st to them (or you pay 0.5% - I think - higher on the 2nd mortgage), and that it is a virtual bank. (The virtual bank part is a bit irritating some times but no big deal if you manage it - they work with RBC so you can deposit payments to them. If you need immediate funds via money order, it takes up to 2 days to get it although you can write a cheque for normal transactions and it`s good immediately.)
So, other than the minor irritations, I find it a very useful product.
Hope this helps! Ken
- Joined
- Oct 16, 2007
- Messages
- 758
Hi,
One complaint that I`ve had with this type of account is that the account requires discipline. Your paycheck gets applied against the balance, and then you draw back money for your regular expenses. If you`re not careful, you could be drawing funds against home equity without knowing it. That was a very common complaint with the Envision CU Red Frog account. It`s identical to the Manual one product.
I`m not sure is Man One changed the product to allow multiple accounts, but at one point it was difficult to diferentiate between taxable and non-taxable LOC`s.
One complaint that I`ve had with this type of account is that the account requires discipline. Your paycheck gets applied against the balance, and then you draw back money for your regular expenses. If you`re not careful, you could be drawing funds against home equity without knowing it. That was a very common complaint with the Envision CU Red Frog account. It`s identical to the Manual one product.
I`m not sure is Man One changed the product to allow multiple accounts, but at one point it was difficult to diferentiate between taxable and non-taxable LOC`s.
- Joined
- Oct 16, 2007
- Messages
- 758
Yes, that`s the idea, that the paycheck prepays the mortgage, thus reducing the interest paid, while you draw back the money for normal living expenses. Makes, sense but I would say it would require dedication not to overspend your prepayment.